TaxTMI 
TaxTMI 
2024 (8) TMI 1553
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....appeals except for change in the scrip in respect of addition made under section 68 by denying exemption claimed under section 10(38) of the Act for the sale proceeds of listed equity shares alleged as penny stock amounting to Rs. 50,62,141/- for Assessment Year 2015-16 on the scrip M/s. PSIT Infra & Services Ltd. (Earlier known as Parag Shilpa Investments Ltd.) and Rs.2,43,98,262/- for Assessment Year 2014-15 on the scrip M/s. KDJ Holidayscapes & Resorts Ltd. (Earlier known as Gomti Finlease India Ltd.). 2.1 Since common issues are involved, both the appeals are being disposed of by this consolidated order. First, we take up ITA No.3264/Mum/2023 for Assessment Year 2015-16. 3. Brief facts of the case are that, assessee filed his return of income on 26.12.2017 reporting total income at Rs.96,20,610/-. Case of the assessee was taken up for scrutiny assessment by issuing notice under section 143(2), dated 29.07.2016 based on information from the Investigation Wing of the Department that the assessee had transacted in certain shares characterised by the Department as penny scrip. After necessary investigation and examination, said assessment proceeding was completed by passing o....
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.... dated 21/11/2014 v. Bhav Copy vi. CIN Master Data B. Purchase Related Documents i. Purchase Bill dated 01/10/2013 ii. Bank Statement disclosing the payment made on 02/08/2013 iii. D-mat Statement dated 31/10/2013 iv. Dematerialisation request form dated 29/10/2013 v. Share Certificates dated 15/10/2013 vi. Sub-division of shares 3.3. Assessee relied upon the above stated documentary evidences to justify the genuineness of the sale and purchase transaction undertaken by him, for which he explained the same as under: "A. In respect of sale transaction a) Assessee sold 60,000 shares of PS IT between 03/12/2014 to 05/12/2014 @ Rs.88.57 per share at Rs. 53,14,090/-. The period of holding is more than 12 months. The sale bills-cum-contract notes of the stock broker Shilpa Stock Broker Pvt Ltd are enclosed wherein the trade number, order number, trade date, trade time, Service Tax and STT paid are reflected. The entire sale transactions had been made on the floor of Bombay Stock Exchange through reputed SEBI registered stock broker M/s. Shilpa Stock Broker Pvt Ltd; b) Confirmati....
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....d any allegations against the assessee. 4. Ld. Assessing Officer, after considering the submissions made by the assessee, arrived at the adverse conclusion by observing that there is unusual rise in the price of the shares sold by the assessee which has been investigated by the Investigation Wing of the Department to establish that cash has been routed from various accounts to provide accommodation to the assessee and that assessee had failed to discharge his bonus to prove the unusual rise and fall of share prices. Ld. Assessing Officer placed heavy reliance on the doctrine of preponderance of human probability to hold that the assessee is indulged in bogus and dubious share transactions since he had not been able to adduce cogent evidences in this regard. 4.1. It is worth noting that before drawing adverse conclusion, ld. Assessing Officer deliberated on the general modus operandi of such transactions as well as background of the investigation carried out by the wing, without pinpointing anything specific towards assessee, in this regard. 4.2. Ld. Assessing Officer, thus completed the assessment by making an addition u/s 68 of the Act towards profit on sale transaction o....
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....iolation to the SEBI Act. The Ld. DR relied on Adjudication order of SEBI dated 18/10/2022, wherein the SEBI had imposed a token penalty of Rs.2,00,000/- u/s 15A(b) of SEBI Act on stock broker named M/s Brijdham Dealcom Pvt Ltd. Such SEBI order would not hold adverse bearing on the appellant, since SEBI had not disputed the genuineness of transactions entered by such broker, however levied a nominal penalty of Rs.2,00,000/- u/s 15A(b) for delay in furnishing the disclosures/return under SEBI Act. The para no.71 to 74 of SEBI order discloses the fact that penalty had been levied on the broker for delayed furnishing of the disclosures under SEBI Act. Further, the period of default of such stock broker pertain to the period from 31/12/2017 to 30/06/2018 (para-11 & 12 of SEBI order) and does not relate to the impugned year." 6. We note that transactions for purchase was undertaken in an offline mode which is an acceptable mode and that of the sale of the aforesaid shares were undertaken on the stock exchange platform through the SEBI registered broker on which STT was levied and the consideration was routed through normal banking channel. The entire flow of these transactio....
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....mpany, PS IT, dated 05.09.2014 placed at para 24 of the paper book. 7.1. For our observations and findings, we place reliance on the decision in the case of CIT vs. Jamnadevi Agrawal [2012] 20 taxmann.com 529 (Bom), wherein it was held that transactions of purchase and sale of shares cannot be considered to be bogus, when the documentary evidences furnished by the assessee establish genuineness of the claim. We also draw our force from the decision of Hon'ble High Court of Delhi in the case of PCIT v. Krishna Devi [2021] 126 taxmann.com 80 (Del) wherein the Hon'ble Court noticed that the reasoning given by the Assessing Officer to disbelieve the capital gain declared by the assessee, viz. astronomical increase in the price of shares, weak fundamentals of the relevant companies are based on mere conjectures. 7.2. Reliance placed by the ld. Assessing Officer on the report of investigation wing without further corroboration based on cogent material does not justify the conclusion that the impugned transaction is bogus, sham and part of racket of accommodation entries. It does not prove that the assessee has carried out the impugned transactions of purchase and sale of shares in ....
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.... Further, it is not a case of mere book entry where a possibility of tainting it as bogus or sham exists but it is a case where actual movement of dematerialised shares has taken place from the DMAT account of the assessee. In our considered view, assessee cannot be put to the rigors of section 68 in respect of sale proceeds received for sale of shares on the stock exchange (BSE) and gain arising thereon. 9. Further, assessee is a regular investor with investment in shares of other companies duly reflected in his DMAT account. Shares of other companies include ALPS BPO Services Ltd., Druva Capital Services Ltd., Goodyear India Ltd., Gujarat Gas Company Ltd., JaiPrakash Associates Ltd., Motorol Enterprises, Nahar Industrial Enterprises ltd., Ojas Asset Re-construction Company ltd., Pavanputra metal ltd., Reliance Power ltd. and Saint Gobain Sekurit India Ltd. 10. We note that ld. Assessing Officer has not brought on record any material to show that assessee was part of any group which was involved in the manipulation of share prices. Suspicion by the ld. Assessing Officer on the purchase and sale of shares is baseless. 11. As already noted above, ld. Assessing Officer has r....
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.... 4. Mr. Walve placed reliance on a judgment of the Apex Court in Principal Commissioner of Income-tax (Central)-1 v. NRA Iron & Steel (P.) Ltd. but that does not help the revenue in as much as the facts in that case were entirely different. 5. In our view, the Tribunal has not committed any perversity or applied incorrect principles to the given facts and when the facts and circumstances are properly analysed and correct test is applied to decide the issue at hand, then, we do not think that question as pressed raises any substantial question of law. 6. The appeal is devoid of merits and it is dismissed with no order as to costs." ii) PCIT vs. Indravadan Jain HUF [2023] 156 taxmann.com 605 (Bom) wherein it was held: "Where shares were purchased by assessee on floor of stock exchange and not from broker, payment was made through banking channel, deliveries were taken in DMAT account where shares remained for more than one year, contract notes were issued and shares were also sold on stock exchange, there was no reason to add capital gains as unexplained cash credit under section 68" iii) CIT vs. Shyam R. Pawar [2015] 54 taxmann.com 108 (....